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There’s no shortage of get-rich-quick schemes but don’t be fooled by their promises of easy wealth; most of these are scams and frauds that will leave you penniless. Instead, spend your time learning how to build wealth. To do so, you need to make an investing plan and adopt a long-term approach to investing. To help you out, here are four effective tips that will help you build wealth.
1. Make a Budget and Stick With It
Building a budget is an important part of your wealth creation strategy. Budgeting helps you follow your plan and achieve financial goals, and it enables you to avoid behaviours that can threaten your goals, like overspending. Budgeting is also essential to understand where your money goes each month.
Money Smart has a free online budgeting planner which you can access here.
2. Build an Emergency Fund
Unexpected expenses can eat into your savings. For example, if your hot water system breaks and you have no emergency savings, you may have to tap into your savings or take on more debt. Luckily, this can be easily avoidable. If you build up an emergency fund, you can avoid those unpleasant choices and enjoy a lower interest rate from an online savings account.
3. Manage Your Debt Effectively
If you’re carrying a credit card balance month to month, you aren’t alone. Of course, not all debt is created equal – mortgages, for example, might be considered “good” debt due to the low-interest rates and wealth-building potential. An example of this is that an owner may still receive money back when they sell their home. Additionally, many experts think of a mortgage payoff as a type of forced savings account because you’ll likely see at least a portion of your monthly payment back when you sell. However, you might jeopardise your financial goals if you’re carrying a lot of bad debt, such as credit card bills with high-interest rates. That’s why it’s important to have a plan for your repayments. The ultimate goal should be to eliminate debt altogether.
4. Diversify Your Investments
If you’re holding tightly to the idea that people become wealthy only by holding highly concentrated positions—perhaps by holding large amounts of Bitcoin—and that diversified portfolios are not the way to go, consider keeping an open mind. It’s important to refrain from putting all your eggs in one basket. A diversified portfolio of assets that do not move in the same direction or the same magnitude all the time helps protect your wealth over the long term while positioning you to reap the rewards even in downturns.
Ready to Build Your Wealth Today?
We hope this article proves to be useful when it comes to helping you build wealth. While this may seem difficult, it can be rather manageable as long as you know what you’re doing. By following the tips that we’ve laid out here, you can make generating wealth infinitely easier. For those who may need more advice, we suggest working with an experienced financial adviser who can help you achieve your short-term and long-term financial goals.
If you are looking for an investment adviser in Newcastle, look no further than Newcastle Financial Planning Group. We are composed of experienced professionals who will help you achieve your financial goals. Call us or book online to secure your complimentary meeting today and learn how we can work together to achieve your financial freedom!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.